Emerald Group Publishing tests ZEN, increases prices: what does it mean?

Initially this criticism was directed at
RCUK’s stated preference for gold OA, which universities feared would have
significant cost implications for them. In response, RCUK offered to provide additional funding to pay for gold OA, and agreed that green OA can be used instead of
gold (although RCUK continues to stress that it “prefers” gold).

At the same time, however, the funder doubled
the permissible embargo period for green OA to 12 months for STM journals and
24 months for HSS journals. This sparked a second round of criticism, with OA advocates complaining that RCUK had succumbed to publisher lobbying. The
lengthened embargoes, they argued, would encourage those publishers without an
embargo to introduce one, and those who already had an embargo to lengthen it.

There was logic in the criticism, since
one rational response to the adjusted RCUK policy that profit-hungry publishers
would be likely to make would be to seek to dissuade authors from embracing
green OA (by imposing a long embargo before papers could be made freely
available), while encouraging them to pick up the money RCUK had put on the
table and pay to publish their papers gold OA instead (which would provide
publishers with additional revenues).

It was therefore no great
surprise when, in April 2013, Emerald Group Publishing — which until then had not had a green embargo
— introduced one. Nor was it a surprise that it settled on the maximum
permitted period allowed by RCUK of 24 months.

It was likewise no surprise
that Emerald’s move also attracted criticism, not just from OA advocates but (in May of that year) from members of the House of Commons
Business, Innovation and Skills (BIS) Committee, which was at the time
conducting an inquiry into
open access.

When taking evidence from the then
Minister of State for Universities and Science David Willetts, for instance,
the MP for Northampton South Brian
Binley said “We have received recent
reports of a major British publisher revising its open access policy to require
embargoes of 24 months, where previously it had required immediate unembargoed
deposit in a repository.” Binley went on to ask if Willetts could therefore please
have someone contact the publisher and investigate the matter.

At the time I also contacted Emerald. I wanted to
know the precise details of its new policy and to establish who would be impacted
by it. This proved a little difficult, but it turned out that Emerald had introduced a “deposit
without embargo if you wish, but not if you must” policy — an approach pioneered by
Elsevier in 2011, but which it recently abandoned.

While the wording of the
Emerald policy may have changed a little since it was introduced, at the time of
writing it appeared to be the same in substance: authors are told that they can
post the pre-print or post-print version of any article they have submitted to
an Emerald journal onto their personal website or institutional repository “with
no payment or embargo period” — unless
the author is subject to an OA mandate, in which case a 24 month embargo
applies.

ZEN = “Zero Embargo Now”

Embargoes have been contentious
for as long as researchers have been self-archiving their papers on the Web. Publishers
have always maintained that green OA threatens their revenues. Their claim is
that libraries will inevitably cancel the subscription of any journal whose
contents are freely available elsewhere. As Elsevier’s Alicia Wise put it recently, “an appropriate amount of time is needed for journals to deliver
value to subscribing customers before the manuscript becomes available for
free. Libraries understandably will not subscribe if the content is immediately
available for free.”

Open access advocates refute
this, arguing that there is no evidence to suggest that embargoes have a
negative impact on journal subscriptions. Consequently, they say, there is no
need to embargo self-archiving. Speaking
at a conference celebrating the tenth anniversary of the Berlin
Declaration on Open Access in 2013,
therefore, Glyn Moodycalled for “the
ZEN approach” to open access — as in “Zero Embargo Now”.

Given this background, I was intrigued
by a recent news item on Library Journal’s
infoDOCKET reporting
that Emerald has decided to undertake what it calls a Zero Embargo trial.

The trial, which will involve 21 Library and Information Science and Information and
Knowledge Management journals, will allow
researchers submitting to these journals (even if the author is subject to an
OA mandate) to deposit the post-print versions of their articles “into their
respective institutional repository immediately upon official publication,
rather than after Emerald’s 24 month embargo period for mandated articles”.

It is an interesting development. But what
impact is it likely to have? That we do not know, not least because — somewhat
ironically given that they have historically been some of the most vociferous
advocates for OA — librarians have not been good
at walking the talk on open access. We also do not know how many librarians are
subject to an OA policy, and those who are not are already free to self-archive
immediately.

Explaining in its press release why it
has introduced the trial the publisher said: “Emerald made the decision to
trial the zero month embargo period following consultation with its newly
formed Librarian Advisory Group (LAG). The group is made up of leading editors
and authors from Emerald Library Studies and Information Management journals,
alongside other key academics in Library Studies and adjacent disciplines. The
group discusses and advises Emerald on issues of common interest in the LIS
field including Open Access policy and editorial best practice.”

Price hike

What Emerald has not been trumpeting,
however, is that it is simultaneously increasing the article-processing charge
of 32 Engineering and Technology journals, from £995 ($1,595), to £1,650 ($2,695) per paper — a
rise of nearly 70%.

This is a hefty increase, and will doubtless
spark a sense of déjà vu for some. In
the 1990s Emerald became the target for heavy criticism for increasing the
price of its journal subscriptions precipitously. Indeed, some believe that the
opprobrium Emerald attracted at that time informed its later decision to change
its name (the publisher was previously called MCB UP). It was assumed that the
name change was intended to distance the company from the negative image it had
acquired — although Emerald has denied that this was the reason.

Either way, the name change did not put
an end to controversy. Emerald attracted further criticism in 2005, when Phil Davis, then at Cornell University, reported that the publisher had
been covertly republishing hundreds of articles in its journals, and without
citing the original source.

So why has Emerald chosen to trial ZEN
with some of it library journals, what role did the LAG play in the decision,
and what do members of the LAG feel about the associated 70% increase in the APCs
of 32 engineering and technology journals?

In the hope of finding out I emailed
Emerald and asked where I could find a list of advisory group members. It turns
out that these are not publicly available. “The Librarian Advisory Group (LAG)
are a newly formed international group who have not given Emerald permission to
share their details so the list is not publically available,” an Emerald spokesperson
told me. “The LAG advised us on issues relating to the zero embargo period for
Library and Information Science and selected Information and Knowledge
Management journals trial. The trial aims to find a sustainable path and we
will be monitoring the impact as it progresses.”

I asked if Emerald could nevertheless put
me in touch with the librarians privately. “I’m afraid I can’t share the details
without their permission”, the Emerald spokesperson replied. “Hopefully you can
appreciate we have to follow our data protection and confidentially procedures.
However if you’re happy to leave it with me, we can ask the group if they
consent to their names being shared. I can then let you know what details they
consent to releasing but I can’t guarantee that I can get a response to you
immediately.”

Two days later, out of the blue, I
received a follow-up message from Emerald: “For the avoidance of doubt, our APC
charges are not subject to discussion with the LAG,” this read, and added, “To
maintain our agreed confidentiality we will not be able to provide you with
contact details at this time.”

So what do other librarians think of the
ZEN trial? When I pointed one (who is not on the LAG) to Emerald’s announcement
he commented, “Well, I think this is a step in the right direction from
Emerald, but I’m also not surprised that they did this with library journals,
which are inexpensive and not cited much. They probably wouldn’t allow this
with Chemistry journals for fear that self-archiving could harm downloads. They
may be trying to outsmart librarians here!”

When I asked him what he meant he
pointed me to a table in the Library
Journal (#3 here)
listing the average cost of journals by subject area. This reveals that the average
library journal subscription is $493 per annum compared to $2,281 for
engineering journals, and $1,876 for technology journals (The average cost of
chemistry journals is $4,333). Clearly it would be less damaging to lose a few
library journal subscriptions than to lose subscriptions to engineering and/or
technology journals.

The follow-up message from Emerald provided
me with the following additional quote on the ZEN trial: “[W]e think it represents
an excellent opportunity to learn by working collaboratively with the
community. Emerald will continue to work with its Librarian Advisory Group
(LAG) to assess the impact of the trial, by monitoring the quality and volume
of submissions, feedback from authors, and readership figures from both the
Emerald platform and institutional repositories. Evaluation of this trial will
help to inform Emerald's future Open Access policies and initiatives.”

It is perhaps important to note here that
even if Emerald were to offer ZEN for all its journals, it would be doing no
more than reverting back to its previous positon, a positon that when speaking
to me in 2001 Emerald’s then business development director Kathryn
Toledano had implied gave Emerald a competitive
advantage. Self-archiving, she said, “is a realistic need for many authors, and
we would rather allow this than miss out on the potential of high-quality
articles that may be published elsewhere.”

The implication is that by offering ZEN
a publisher can hope to attract authors who might otherwise publish elsewhere.
Might it be, therefore, that Emerald has decided to test ZEN because it has
experienced a fall in submissions from librarians in the wake of imposing its
embargo?

What seems odd, however, is that Emerald
insists on keeping the names of the LAG secret. After all, in its press release
it made a point of saying that it had consulted with the group. Given that, why
would it want to withhold their names? And if it is the librarians themselves
who want to remain anonymous, we must wonder why they are so shy.

Based on market and competitor
analysis

When I asked the Emerald spokesperson
why the publisher had decided to increase the APCs for 32 of its journals, and
why the rise was quite so precipitous, she replied: “The decision, based on
market and competitor analysis, will bring Emerald’s APC pricing in line with
the wider market, taking a mid-point position amongst its competitors. The
increased price point will also enable the company to better support the author
community as OA developments continue to evolve.”

This would seem to imply that Emerald’s
pricing policy is based not on what it costs to publish an article or journal (plus an element of profit),
but on what other publishers charge. When I put this to the Emerald
spokesperson she replied, “Naturally Emerald took lots of different elements
into consideration such as our own business costs and market analysis, however
the decision also seriously considered how we can better position the portfolio
to support the author community for the future.”

In her follow-up message two days later
she added: “Emerald is fully committed to maintaining a fair price for its Gold
OA option for authors and funders. With this in mind, we have been continually
reviewing the level of APCs since introducing our Open Access option. We feel
the APCs currently in place will support on-going OA initiatives that help the
scholarly communities we work with to make a greater impact with the research
they publish.”

But what does this all mean? It is worth
remembering that OA advocates have always insisted that open access would act
as a disruptive force in the scholarly communication market. For instance, they
said, by lowering the cost of entry it would allow new publishers and new
products to emerge. And by leveraging web technology these new entrants would
completely reinvent scholarly publishing for the networked age. Amongst other
things, this would increase the speed and efficiency with which research was
shared, and so enable better and faster innovation to take place, to the benefit
of the whole of society. Importantly, they added, it would lower the costs of
scholarly publishing, and so resolve the affordability problem that has
had the research community in its iron fist for several decades now.

To date none of these objectives has
been realised. While we have seen a few experiments in alternative peer review
practices, and new ways of trying to measure the quality and impact of
research, the outdated journal model continues to dominate, the quality of
papers has fallen, retractions have increased, and sharing research remains a slow
and inefficient process.

As former CEO of scholarly publisher De Gruyter Sven Fundnoted
recently, OA has not changed the game in any meaningful way. “While it has
achieved remarkable change within the system, this has not led to a
paradigmatic change”, he said, adding that this is partly because “its disruptive
potential has been rather fenced during the past years.”

Meanwhile, traditional publishers are in
the process of capturing open access in order to exploit it for their own ends,
with the result that costs are rising rather than falling — as evidenced by the
fact that large subscription publishers appear to be hoovering up most of the
money that research funders like the Wellcome Trust
and RCUK are making available in order to fund gold OA (and this is in addition to the subscription
revenues they continue to earn).

It is no surprise, therefore, that large
publishers continue to enjoy operating profits of around 34% to 40%,
a level widely felt to be far too high. (See here, here, here, and here for
example).

Emerald’s recent price increase would
seem to confirm that the trajectory for prices is up rather than down. And for
so long as publishers set the price of their OA services at a level intended to
preserve their historical revenues (or at a level that matches what their
competitors charge), the much-anticipated cost savings OA was expected to
deliver are unlikely to be realised.

Consolidation rather than disruption

But there is more to explore here. The
year before I spoke to Toledano (2001) Emerald’s profits had risen by 47%, to
£7.5 million. Importantly, its operating profit as a percentage of turnover was
comparable to that of the large scholarly publishers — 38%.

In order to compare this with Emerald’s current
performance I took a look at the publisher’s recent financial figures. As these
do not appear to be on its web site (perhaps because it is a private company) I
downloaded several years-worth of the financial reports that Emerald has filed
at UK Companies House.

These show that last year (2014) Emerald’s
operating profits were just £219,401 higher than in 2001. Moreover, the year
before (2013) they had been £334,543 lower than in 2001 (but £89,868 higher
than 2001 in 2012).

Significantly, while Emerald’s turnover
has increased from around £20 million in 2001 to £36.7 million today, its
operating margin has declined to 21%. This may still be a margin many
industries would envy, but what do we make of the fact that Emerald’s profitability
over the past 13 years has declined? Has Emerald not been as canny as its larger
competitors, or does it tell us something about the scholarly communication
market? Does it, for instance, support the OA movement’s assertion that open
access will inevitably exert downward pressure on publisher profitability, and
so eventually resolve the affordability problem?

Clearly, we cannot generalise from just
one company. Nevertheless, as noted earlier, Emerald’s recent hike in prices does
not appear to suggest that the publishing costs incurred by the research
community are on a downward path.

As also noted, the assumption made by the OA
movement was that the web would allow a host of small, innovative new companies
to enter the scholarly publishing market, and impose intense competitive
pressure on incumbents. Amongst other things, they said, this would drive down prices.
But while we have seen companies like PLOS and PeerJ emerge, it appears that the web has accelerated
consolidation in the industry rather than disrupted it. This has allowed incumbents
to control pricing. And as the big beasts get bigger so the affordability problemgets worse.

The extent to which just a few large companies
now dominate the scholarly publishing market is clear to see if one reads a
recent paper entitled
The Oligopoly of Academic Publishers in
the Digital Era, published in June in PLOS ONE.

As the paper’s abstract puts it, “The
consolidation of the scientific publishing industry has been the topic of much
debate within and outside the scientific community, especially in relation to
major publishers’ high profit margins. However, the share of scientific output
published in the journals of these major publishers, as well as its evolution
over time and across various disciplines, has not yet been analyzed.”

Consequently, it says, “This paper
provides such analysis [and] shows that in both natural and medical sciences
(NMS) and social sciences and humanities (SSH), Reed-Elsevier, Wiley-Blackwell,
Springer, and Taylor & Francis increased their share of the published
output, especially since the advent of the digital era (mid-1990s). Combined,
the top five most prolific publishers account for more than 50% of all papers
published in 2013. Disciplines of the social sciences have the highest level of
concentration (70% of papers from the top five publishers), while the
humanities have remained relatively independent (20% from top five publishers).”

In other words, rather than curbing the
power of large publishers, the digital environment and open access have conspired
to increase their domination. This in turn is allowing them to set their own
prices. Indeed, by introducing hybrid OA,
they are now able to double charge
as well, gouging the public purse as never before (as the Wellcome Trust and
RCUK figures cited above show). And as Emerald’s price increase demonstrates,
smaller publishers look to their competitors when setting their prices. Essentially,
scholarly publishing has become a pricing arms race.

However one looks at it, any expectation
that open access will lower costs currently appears a forlorn one, and the
affordability problem can only be expected to worsen going forward. Surprisingly,
however, this looks to be bad news not just for the research community, but for
smaller publisher too. Let’s see why.

A scale game

When I asked Claudio Aspesi,
a senior research analyst at Bernstein Research specialising in scholarly publishing, about Emerald’s financial
reports he confirmed that the company’s operating margin has fallen to 21%. But
he added: “I am not shocked that a smaller publisher should have lower margins
than Elsevier — in the end this is a scale game.”

He explained, “One way to think about
this is that Elsevier achieves about £1.1 billion in revenues with about 2,500
titles (i.e. £440,000 per title), while Emerald has revenues of £36.7 million
with about 290 titles, i.e. £126,000 per title (and this is a generous assumption,
since their revenues also include books, while the Elsevier data includes only
journals). Unfortunately, we do not get an annual article count (the web site
mentions 80,000 articles — but it does not clarify whether this is an annual
number)”

In other words, Aspesi added, “Elsevier
gets £1.1 billion in revenues off 350,000 articles, which equates to about
£3,100 per article, while — if we assume Emerald publishes 80,000 articles — it
makes £460 per article. This is not unreasonable for a small publisher, but it
also explains the gap in profitability.”

Emerald’s latest price increase,
therefore, needs to be seen in this context. Faced with a falling operating margin,
the publisher presumably feels compelled to keep up with its larger competitors
on pricing. In doing so, however, it may be running to keep still.

Given this, Emerald’s (currently
limited) return to ZEN would seem to make sense. As Toledano suggested in 2001,
allowing immediate self-archiving could provide smaller publishers with a
competitive advantage. This seems all the more likely in light of Elsevier’s
recent tightening up
of its self-archiving rules (introducing embargoes where they did not
previously exist, amongst other things).

But here is the interesting question: is
it more likely that Emerald will return to ZEN with all its journals, or that
it will extend its recent price increase to all its journals?

Given RCUK’s preference for gold OA, and
its current willingness to pay publishers’ asking price, the latter might seem
more likely. RCUK’s policy is fuelling price inflation. And since the oligopolists
of scholarly publishing appear free to charge what they want, they will
naturally seek to extract more and more money from the public purse each year, enabling
them to get bigger and bigger.

As a result, the pressure on smaller
publishers to increase prices in the slipstream of their larger competitors can be expected to grow. Not
only do they need to keep up with the market price, but as the Big
5 get bigger we can anticipate that it will become more and more difficult for smaller
players to maintain their operating margin, not least because they can only
dream of the economies of scale enjoyed by the behemoths.

——

In
the interests of fairness, on Monday I forwarded a draft copy of the above text
to Emerald Group Publishing, indicating that I would be happy to post a response
beneath my text. I had received no reply to my email from the company at the
time of publication.

4 comments:

I have had a comment emailed to me saying that it is normal in the for-profit business world to charge what the market will bear, rather than simply covering one’s cost. Of course, that is true. The problem with the scholarly journal market, however, is that it does not work as a “true market”. Certainly there do not appear to be effective market forces at work to impose price restraint, particularly when funders are willing to pay publishers' asking price.

Good analysis. Yes, the name of the game for journal publishers is to preserve (and, where possible increase) current revenue streams and profit margins for as long as possible, whether via subscriptions or Fools-Gold or both. And yes, it is an oligopoly. And yes, Emerald is trying some smaller-player manoeuvres here, to preserve or increase its market share, within the oligopoly, with Green perks and Fools-Gold price hikes.

But mandated Green OA self-archiving can circumnavigate all of this (despite Green OA embargoes) and provide OA just the same. And once the institutions, funders and researchers of the planet come to their senses, mandatory Green OA will prevail, journal subscriptions will become cancellable; Fools-Gold will become unnecessary; and affordable, scaleable, sustainable Fair-Gold will follow.

I make no predictions on timing because — as two decades of sleep-walking have amply shown — there’s no second-guessing the human capacity for fog or folly.

"While we have seen a few experiments in alternative peer review practices, and new ways of trying to measure the quality and impact of research, the outdated journal model continues to dominate, the quality of papers has fallen, retractions have increased, and sharing research remains a slow and inefficient process."

I also had in mind the rise and rise of so-called predatory journals, many of whom either do not appear to have papers peer reviewed at all, or encourage reviewers to do it in a totally inadequate way.

All the above things appear to be on the rise right now, and all are causing the quality of papers to fall. And it seems to me that most of these phenomena are at least partly a consequence of the pressure on researchers to publish, which is I believe a relatively new phenomenon (certainly historically speaking).

I can also say that I have read a great many papers that are clearly (even to me as a layperson) of very poor quality, and I cannot believe that anyone would have gone to the effort of producing them if it were not because of the growing demands on researchers to publish.